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New Car Dealers in the US - Industry Market Research Report

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  • 56 Pages
  • January 2023
  • Region: United States
  • IBISWorld
  • ID: 16796

Just like new: Limited supply of cars pushes prices higher, benefiting operators despite fewer cars sold

The New Car Dealers industry is highly fragmented and experiences a very low level of market share concentration. In 2019, the four largest industry operators are expected to account for just 5.0% of total industry revenue. Top companies include AutoNation Inc., Sonic Automotive Inc., Penske Automotive Group Inc. and Group 1 Automotive Inc. Consolidation has gained pace over the past five years, with larger publicly traded dealership groups absorbing small dealerships.

Licensing fees and regulations raise barriers to entry

- The New Car Dealers industry has moderate barriers to entry. Prospective operators must be prepared to comply with state regulations, manufacturer franchise agreements and start-up costs. Every state has different licensing requirements and regulations for new car dealers. Additionally, dealer licenses and franchise agreements must be renewed annually. Franchise fees, which vary by brand, number of stores and distance from other franchises, cost an average $25,000 per year, with reduced fees for dealerships owned by women or ethnic minorities. Most car makers limit the number of franchises within metro areas, making it difficult for new businesses to attain a franchise agreement. The industry also requires high upfront capital investment in inventory purchases and dealership lots.

Vehicle prices and customer service drive competition

- Operators in the New Car Dealers industry experience stiff competition, particularly in large metropolitan areas, where there are dealers of every car brand and even multiple dealers selling the same make. Dealers principally compete on new vehicle prices but also compete through warranty, credit offerings and sales experience. Quality of customer service in the parts and repair business is a significant point of competition within a franchise's dealer network; poor customer service can drive customers to other dealerships within the franchise to get their car serviced without violating manufacturer warranties. Dealer groups are able to operate on lower profit due to cost-savings from marketing expenses, improved credit terms and inventory management.

Operators in the New Car Dealers industry sell new and used passenger vehicles. Vehicles include passenger cars, light trucks, sport utility vehicles (SUVs) and passenger vans. New car dealers also sell parts and provide repair services.

This report covers the scope, size, disposition and growth of the industry including the key sensitivities and success factors. Also included are five year industry forecasts, growth rates and an analysis of the industry key players and their market shares.

Table of Contents

  • Industry Definition
  • Main Activities
  • Similar Industries
  • Additional Resources

  • Executive Summary
  • Key External Drivers
  • Current Performance
  • Industry Outlook
  • Industry Life Cycle
  • Supply Chain
  • Products & Services
  • Demand Determinants
  • Major Markets
  • International Trade
  • Business Locations
  • Market Share Concentration
  • Key Success Factors
  • Cost Structure Benchmarks
  • Basis of Competition
  • Barriers to Entry
  • Industry Globalization

  • Capital Intensity
  • Technology & Systems
  • Revenue Volatility
  • Regulation & Policy
  • Industry Assistance
  • Industry Data
  • Annual Change
  • Key Ratios

Companies Mentioned

A selection of companies mentioned in this report includes:

  • Lithia Motors Inc.
  • Autonation Inc.
  • Penske Automotive Group Inc.
  • Group 1 Automotive Inc.
  • Herb Chambers Cos.
  • Ganley Auto Group
  • Potamkin Automotive Group Inc.
  • Norm Reeves Superstores
  • Napleton Automotive Group
  • Longo Toyota
  • Global Auto Mall
  • Ron Lewis Automotive Group
  • Balise Motor Sales Company
  • Hunter Trucks Sales & Service Inc.
  • Ed Voyles Automotive Group
  • Lia Auto Group
  • Keller Bros. Ford
  • Prime Motor Group
  • Sansone Auto Group
  • Atlanta Luxury Motors Mall of Georgia
  • Bob Loquercio Auto Group
  • Plaza Auto Mall
  • H&H Chevrolet Cadillac
  • Green Family Stores Inc.